How to Effectively Respond to ITC Reversal Notices When Your Supplier Defaults on GST Payments
Input Tax Credit (ITC) is a crucial component of the GST framework, helping businesses manage cash flow and reduce tax liabilities. However, many taxpayers face a significant challenge when tax authorities issue ITC reversal notices due to a supplier’s failure to pay their Output Tax Liability. Despite fulfilling their own compliance obligations, recipients are often held accountable, leading to financial strain and legal uncertainty.
The May 2022 edition of the NIRC ICAI Newsletter provided an in-depth analysis of this issue, offering valuable insights into the legal framework and best practices for businesses to safeguard their ITC claims. In this blog, we explore:
✅ Understanding GST Provisions – Key legal aspects governing ITC reversals and recipient liabilities
✅ How to Respond Effectively – Drafting a strong reply with supporting documentation
✅ Legal Remedies & Preventive Measures – Steps to protect your business and avoid future risks
As tax authorities intensify their scrutiny, businesses must be well-prepared to defend their ITC claims while ensuring compliance with GST laws. Learn how to navigate ITC reversals, mitigate financial risks, and protect your business from unforeseen tax liabilities.
